Free Float Violation: Chellarams Escapes NSE’s Hammer

Goddy Egene Chellarams Plc, a company listed in the conglomerates sector of the Nigerian Stock Exchange (NSE), has escaped delisting for not complying with the free float requirement of 20 per cent.

THISDAY had last December reported that Chellarams, which got listed on the NSE since 1977 might be delisted because of share floatation deficiency.

Companies listed on the exchange must maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities.

The listing requirements of the NSE stipulate that for a company to be listed on mainboard of the exchange, 20 per cent of its shares must be made available to the public(free float).

However, THISDAY checks had shown that despite having been listed since 1977, Chellarams Plc had a free float deficiency of 14.87 per cent. According to the NSE records, only 5.13 per cent of the company shares are in the hands of the investing public and trading on the exchange. And the company had December 31, 2014 to comply or be delisted.

But Chellarams escaped NSE’s hammer as the company has been granted an extension to July 8, 2016

An NSE source had said “Except Chellarams Plc complies with the provision by December 31, 2014, the NSE may have no other option but to proceed with the delisting process. As you are aware, the NSE now has high level of zero tolerance for violation of post-listing requirements. All companies must adhere to the rules of the game. This is more so now that the NSE is full member of the World Federation of Exchanges (WFE).”

However, it was gathered that the NSE had to consider an extension for the company following efforts being made to comply.

“Given the current state of the market and efforts to restore investor and issuers confidence, it will be demoralising to delist companies now. The NSE decided to soft pedal considering the moves